KUALA LUMPUR (Jan 17): The High Court had on Monday (Jan 17) fixed Feb 10 to deliver its decision on the injunction application by Serba Dinamik Holdings Bhd against Bursa Malaysia Securities Bhd, which had forced the company to release the factual findings update (FFU) done by Ernst & Young Consulting Sdn Bhd (E&Y Consulting).
Justice Datuk Ahmad Fairuz Zainol Abidin fixed the date after hearing submissions from Serba Dinamik's counsel Mak Lin Kum and Bursa's Datuk Loh Siew Cheang.
The central issue, Mak argued, was that Bursa's management had allegedly violated the principles of natural justice in suspending trade on Serba Dinamik's shares last October after the group refused to announce the FFU.
“Bursa has acted in excess of jurisdiction, as it [through the management] has no power to make the directives to compel Serba Dinamik to reveal the FFU. My client is the aggrieved party and we are deeply prejudiced by this,” he said.
Mak claimed that the directives were made without receiving the go-ahead from Bursa's Listing Committee.
He added that at a meeting on Oct 21 last year, when Bursa told Serba Dinamik's independent non-executive directors to publicly reveal the FFU findings, its directors were not in possession of the updates.
The lawyer also said there were questions surrounding E&Y Consulting's qualification to conduct the Special Independent Review (SIR), as there were doubts over whether the firm is a qualified auditor.
According to Mak, E & Y Consulting should not be considered an auditor as defined by the Securities Commission.
Moreover, when the firm was hired, it had been stipulated that they were not to reveal their findings to third parties, including Bursa, claimed Serba Dinamik’s counsel.
In its suit against Bursa filed last November, Serba Dinamik sought to nullify the appointment of E & Y Consulting under Bursa’s directive to conduct the SIR.
The oil and gas engineering services company also sought interim injunctive relief against Bursa to restrain the stock exchange from releasing the update pending the disposal of the suit.
Serba Dinamik has been under regulatory and public scrutiny amid several issues raised by its then external auditor KPMG involving its accounts for the 12-month period ended Dec 31, 2020.
Meanwhile, Bursa has filed for legal action against Serba Dinamik at another High Court to compel the company to reveal the FFU. The Judicial Commissioner Wan Muhammad Amin Wan Yahya has fixed Jan 27 to deliver its decision.
Bursa: SIR does not require a conventional auditor
Bursa's counsel Loh said in his submissions that Serba Dinamik has no locus standi (legal standing) to initiate this legal action as it is not an aggrieved party.
“This follows the company is not a person aggrieved within the meaning of Section 360(1) (d) of the Capital Market Services Act 2007 (CMSA) and Bursa is not the other person referred in that section which has contravened a relevant requirement under Section 360 (13) of the same Act,” he said.
A person aggrieved, he added, does not refer to a listed issuer but a person who is affected by the conduct of another person in breach of relevant requirements, whose breach is not pursued by regulators for whatever reasons.
For these reasons, Loh said Serba Dinamik does not have the legal standing to initiate this action as it is not considered an aggrieved person within this meaning.
Section 360 of the CMSA refers to the power of the court to make certain orders.
In his reply, Loh said the SIR does not require the appointment of an auditor in a conventional and orthodox sense.
“What is important, is that they are to produce the report to the stakeholders
“The report to be prepared is to review and investigate the affairs of the company,” he said, adding that the background of the SIR was that an earlier audit was done by KPMG before this.
The senior counsel said KPMG found that there was misreporting of more than RM3 billion in revenue, when there was none.
In addition, Loh said Bursa as a regulator is empowered to compel Serba Dinamik to reveal the findings of the FFU — which Serba Dinamik chose not to — in the interest of transparency.
He further said that if one were to interpret Serba Dinamik's reasons for initiating the legal action by claiming that it is an aggrieved party as per Section 360, it would appear as if the company was the regulator while Bursa was a regulatee.
“This cannot be the case,” Loh said.
As a result of non-compliance, he added, Bursa has the power to suspend the company.
He said Bursa does not intend to suspend Serba Dinamik, as long as it complied with the directive.
The Listing Committee, Loh added, is not required to deal with the suspension of any company as this would be up to the management of the regulators.
He further refuted the argument that Bursa had acted beyond its jurisdiction to compel Serba Dinamik to reveal the FFU.
Loh also pointed out that there were some “unusual activities” in the company's shares just after Bursa had asked Serba Dinamik to reveal the findings, that led to the regulator issuing the suspension.
He concurred with Mak that due to the suspension, Serba Dinamik is listed as a PN17 company.
Previously, it was reported that Serba Dinamik tried to recuse Justice Ahmad Fairuz from presiding over the case but this was dismissed by the court.
Jan 27 fixed for decision on Bursa's bid to compel Serba Dinamik to disclose review findings
Serba Dinamik fails to recuse judge in lawsuit against Bursa
Bursa seeks court order to compel Serba Dinamik to disclose update on independent review factual findings